Technical analysis began more than 100 years ago with the use of charts. For example, candlestick charts were originally developed in Japan over 150 years ago to anticipate movements in the rice market. For years, technicians have tried to identify patterns in individual stock prices, the market as a whole, or even in a particular industry segment. Technical analysis involves identifying and interpreting stock price movements to predict future movements in the price of a stock. However, charts only reveal data of past price movements. Therefore, in technical analysis, past price movements are often combined with knowledge about historical cycles in the market when predicting future stock prices.
Initially, technical analysis involved a very manually intensive process of identifying trends within charts. Therefore, technical analysis was not beneficial to most investors. This is due to the time delay that it would take to develop the technical analysis manually, and disseminate the information to traders. In addition, the information would be provided to many traders at rather granular intervals, making the information less valuable. With advances in computer hardware and software for identifying patterns in sets of data, technical analysis can now be performed on computers in a real time fashion.
The speed at which the data is processed also allows the user to evaluate the data based on more complex analysis strategies including multiple independent or interdependent algorithms. Accordingly, uptrend, downtrend, or neutral indications can be obtained by applying multiple algorithms within a single analysis strategy. One such analysis strategy can be applied using moving average convergence divergence (MACD). Thomas Aspry developed the MACD histogram in 1986. The (MACD) is one of the simplest and most reliable indicators available. The most popular formula for the standard MACD is the difference between a security's twenty-six day and twelve day exponential moving averages (EMA). A plot of this difference may be presented as a histogram. In addition, multiple criteria may be used to evaluate the histogram to formulate an uptrend, downtrend, or neutral trend indication.
A variety of software applications are available for displaying uptrend and downtrend indications. For example, it is well known to display security price data over a period of time in the form of a chart. Moving averages and other indicators are then drawn over the top of or adjacent to the price data and are aligned temporally. To provide a quick overview to investors, software was developed that includes visual indicators such as colored up and down arrows indicating whether the price of the security has moved up or down relative to the previous day's closing price. For example, it is well known to use a green indicator such as an arrow or some other symbol to indicate that the price of a security has moved up relative to the prior closing price, and to use a red arrow or some other symbol to indicate that the security price has moved down relative to its previous close. It is well known to display a security stock symbol in a cell or block with a color to indicate whether the stock price is up or down for the day. It is also well known to indicate the current stock price as well as a percentage change in that price for a given day in combination with a range of colors or shades indicating by percentage how much the stock price have gone up or down. Other software programs have combined the cell or block displays with the use of various color schemes or shades of color to rank a particular security. For example, one trading tool offered by J.S. Services and marketed under the name Market Color uses a variety of colors and shades to indicate whether the underlying security should be bought, held or sold. The Market Color tool displays a particular security and the current price of the security including any changes in the price of the security since the previous close.
Although products have previously been introduced that display uptrend or downtrend indicators, the user cannot easily ascertain the reliability of the indicator or understand what criteria were used in determining the trend indication. In view of the above, it is apparent that there exists a need for an improved system and method for displaying a trend indication.